Lumentum Holdings Inc

The Board of Investment (BOI) expects Thailand to receive a new wave of investment within the next 3-5 years from the AI, semiconductor, smart vehicle, and smart electronics supply chains. BOI Secretary-General Narit Therdsteerasukdi stated at the Thailand Focus 2026 event that Thailand remains a key destination for foreign direct investment in Asia. He added that a national semiconductor strategy will be proposed in early September, along with efforts to develop human resources, build new supply chains, and enhance business convenience through the Thailand Fast Pass program. The BOI targets GDP growth of at least 3% per year by 2035 and aims to rank among the world's top 20 in competitiveness by 2030. Meanwhile, Infineon Technologies is building a new backend plant in Thailand that will be nearly twice the size of its largest hub, and Lumentum has expanded its workforce in Thailand from a few hundred people eight years ago to 9,000, with plans to reach 10,000 soon, making Thailand the company's largest production base globally.

Lumentum is accelerating its transition to 1.6T transceivers and 200G-per-lane optical technology as hyperscalers deploy bandwidth-intensive AI clusters. The company began shipping 1.6T transceivers in the fourth quarter of fiscal 2026, with the bulk of cloud transceiver shipments still at 800G, and expects adoption to intensify from the first quarter of fiscal 2027 through calendar 2027. Lumentum's 200G-per-lane Electro-absorption Modulated Laser products already account for more than 25% of EML revenues, and the company expects 200G EMLs to represent 50% or more of volume by mid-2027. To capture demand, Lumentum is expanding capacity across its two indium-phosphide wafer fabs in Japan and expects more than 50% year-over-year EML unit growth in the December 2026 quarter. However, Cisco is strengthening its competitive position through Acacia optics and Silicon One-based AI networking, with Acacia generating more than $1 billion in fiscal fourth-quarter orders, while NVIDIA's Data Center networking revenue nearly tripled year over year to $15 billion. Lumentum shares have appreciated 125.3% year to date, and the Zacks Consensus Estimate for earnings is $4.23 per share, up 67 cents over the past 30 days.

Zacks Equity Research highlights Dell Technologies, Celestica, Lumentum Holdings, and Vertiv Holdings as four stocks positioned to benefit from AI data center expansion beyond chipmakers. Amazon, Alphabet, Microsoft, and Meta Platforms are expected to spend roughly $720 billion to $745 billion on capital expenditures in 2026, with a large portion directed toward AI infrastructure. Dell reported record quarterly revenues of $43.84 billion in the first quarter of fiscal 2027, up 88% year over year, and raised its AI server revenue expectations for fiscal 2027 to about $60 billion. Celestica's second-quarter 2026 revenues jumped 62% year over year to $4.70 billion, and it raised its full-year 2026 revenue outlook to $20.5 billion from $19 billion. Lumentum's fourth-quarter fiscal 2026 net revenues reached a record $1.01 billion, more than doubling from $480.7 million a year earlier, and NVIDIA committed to invest $2 billion in the company. Vertiv's second-quarter 2026 revenues increased 24% year over year to $3.27 billion, and it raised its full-year 2026 revenue guidance range to $13.8-$14.2 billion from $13.5-$14 billion.

Investors are rotating beyond Nvidia toward exchange-traded funds that capture the optical connectivity layer of artificial intelligence infrastructure. Global demand for AI-focused optical transceivers is projected to reach $26 billion by the end of 2026, a 57% year-over-year surge, according to TrendForce, while Yole Group projects the global optical transceiver market to hit $112.3 billion by 2031. The Roundhill Photonics & Optics ETF, ticker LYTE, generated $72 million in trading volume on its first day, surpassing the opening-day volume of the DRAM ETF at about $69.5 million. Among the funds highlighted, LYTE has gained 12.6% since its August 6, 2026 launch, the Tema Photonics & Optical ETF, ticker LAZR, has soared 33.9% over the past month, and the Corgi Lithography & Semiconductor Photonics ETF, ticker EUV, has rallied 14.5% over the past month.

Nvidia has moved its Spectrum-X co-packaged optics switches into mass production, with GF Securities projecting shipments to surge from 15,000 units in 2026 to 100,000 in 2027. The ramp is part of Nvidia's push to capture more AI-system spending beyond GPUs, as networking becomes a critical bottleneck in large AI clusters. TSMC has substantially expanded its CPO testing and inspection capacity, notably adding Insertion 2/3 capacity, according to GF Securities analyst Alicia Xia. Nvidia's NVL576-based scale-up systems using CPO or near-packaged optics are expected to begin adoption in the second half of 2027. Amazon's Trainium 4 is also expected to adopt near-packaged optics and Nvidia's NVLink Fusion, potentially extending Nvidia's technology into custom AI infrastructure, benefiting suppliers including Lumentum, Coherent, Semtech, Marvell, and Tower Semiconductor.

AI networking stocks surged on Monday after a Mizuho research note pointed to accelerating demand across the AI high-speed interconnect layer. Marvell Technology rose 7.8% to $239.33, Credo Technology gained 8.3% to $281.48, and Ciena climbed 5.18% to $451. The note, published Sunday, cited a strong VR200 ramp as positive for near-package optics, co-packaged optics, and NVIDIA's Spectrum-X, and flagged Dell, Credo, NVIDIA, Broadcom, and Lumentum as 2027 earnings beneficiaries. Mizuho also projected CoWoS advanced packaging capacity growth of more than 75% in 2027, which would ease supply constraints on Marvell's custom AI silicon programs. Recent 13F filings showed heavy institutional interest, including Gavin Baker's Atreides Management holding concentrated positions across Credo, Ciena, and Astera Labs.

Lumentum Holdings reported fiscal 2026 fourth-quarter results that crushed analyst expectations, with revenue jumping 109% year over year to just over $1 billion and adjusted earnings per share rising nearly 3.7 times to $3.23. The company guided for current-quarter revenue of $1.25 billion, up 134% year over year, and adjusted earnings per share of $4.20, up from $1.10 a year earlier. Rosenblatt Securities estimates optical component production capacity will increase 12 times between 2025 and 2030, yet supply will still trail demand by 50% in 2030. Goldman Sachs expects the optical networking market's revenue to increase ninefold to $154 billion by 2028. Lumentum stock has gained 140% in 2026 and trades at 42 times forward earnings, with consensus estimates projecting earnings per share of $45.98 in three years.

AXT soared again on Monday to lead optics stocks, with Coherent and Lumentum rallying on indium phosphide price hikes. AXT climbed 13.71% intraday to $92.83, extending a year-to-date gain of 399.33%, while Coherent rose 8.12% and Lumentum added 6.79%. The catalyst was a United Daily News report of Q4 indium phosphide substrate price increases topping 10%, the largest on record, versus earlier expectations of 3% to 5%. AXT's Q2 2026 revenue hit $47.6 million, up 164% year over year, with indium phosphide revenue at a record $30.7 million and non-GAAP gross margin of 45.0%. Coherent guided fiscal Q1 revenue to $2.2 billion to $2.4 billion, and Lumentum guided Q1 revenue to roughly $1.25 billion. WOLF climbs 6% Monday as a Mizuho note flags strong VR200 NVL72 ramps, adding a power-supply tailwind to the broader optics surge. NVIDIA disclosed a $3 billion stake in Coherent equal to nearly 5% of its 13F portfolio, and D.E. Shaw holds 2.25 million AXTI shares.

Lumentum Holdings, recommended by 24/7 Wall St. at $83.85, now trades around $926 per share after its fiscal Q4 2026 earnings report showed revenue of $1.0063 billion, up 109.3% year over year, and non-GAAP EPS of $3.23 versus a $2.97 consensus. The company guided Q1 FY27 revenue to a midpoint of $1.25 billion, more than a quarter ahead of its own target model, and management said pump lasers are effectively sold out with a four-fold increase in shipments expected over the next several quarters and market share in the 70-80% range. Lumentum also said co-packaged optics demand from its largest customer, NVIDIA, is landing in the second half of 2027, and near-package optics is completely additive, expanding its total addressable market. Separately, Marvell Technology is seen as a key design partner for Microsoft's Maya 300 custom accelerator, which is reportedly targeting 300,000 chips in 2027, and Marvell management has told investors custom revenue is on track to more than double year over year in FY2028, tracking toward a long-term target of over $10 billion in custom revenue in fiscal 2029.

AI infrastructure stocks edged higher in pre-market trading on Monday after Anthropic's second quarter revenue surged to $11.5B, nearly two-and-a-half times the first quarter's $4.7B figure. The Dario Amodei-led firm also recorded positive adjusted operating income for the first time. Memory and storage companies rose, with Micron Technology up 3%, Seagate Technology up 2.5%, Sandisk up 3.5%, Western Digital up 2.6%, and Nasdaq newcomer SK Hynix up 3%. Networking stocks were mostly higher, with Lumentum Holdings, Ciena, and Corning all up 1.5%, while Applied Optoelectronics and Coherent both increased 1.7%. Chipmakers were modestly higher, with Intel and Nvidia both up about 0.7%, after Nvidia slashed its financial backing for a massive OpenAI data center project in Ohio from $250B to less than $120B. The largest hyperscalers were mixed, with Oracle down 1.1%, Microsoft down 0.7%, Google up 0.2%, and Amazon up 1.4%.

Nvidia announced that its Spectrum-X Ethernet silicon photonics switches have entered full mass production, driving a broad rally in A-share CPO concept stocks. On August 17, Jones Tech scored a second consecutive 20 percent daily limit, while T&S Communications and TZTEK Technology rose more than 10 percent. Gongjin Electronics and Tianyang New Materials hit their daily limits, and Shijia Photons and TFC Communication followed higher. The switch is the world's first 200 gigabit per lane CPO Ethernet switch system to enter mass production, cutting the number of lasers to one quarter of traditional designs, reducing power consumption to one fifth, lowering optical loss from about 22 decibels to about 4 decibels, and improving signal integrity by 64 times. Among overseas suppliers, Lumentum expects scale-up products to begin volume shipments in the second half of 2027, while Coherent's scale-out CPO will start contributing revenue in the second half of this year. Both Guolian Minsheng Securities and Sinolink Securities are bullish on the industry opportunities from accelerating CPO adoption.

Nvidia is deploying its surging free cash flow into strategic investments, committing at least $6.5 billion to photonics companies including $2 billion each for Lumintum (LITE), Coherent Corporation (COHR), and Marvell Technology (MRVL), plus $500 million for Corning (GLW). The chipmaker also reportedly plans to invest up to $3 billion in privately held Lancium, an energy and data center infrastructure company backed by Blackstone, taking an initial 20% stake for $2 billion with a potential additional $1 billion tied to performance targets. Lancium owns the 1.2-gigawatt Lancium Clean Campus in Abilene, Texas, site of the $500 billion Stargate project. Nvidia's free cash flow has grown from $3.8 billion in fiscal 2023 to $96.67 billion in fiscal 2026, and the company is working with Blackstone, BlackRock, Apollo, Brookfield, Goldman Sachs, and KKR to mobilize over $500 billion in third-party capital for AI infrastructure.

Intel priced an upsized $20 billion public stock offering this week, selling over 210 million shares at $95 each and expecting net proceeds of about $19.7 billion to fund AI-related growth opportunities. Super Micro Computer closed 19% higher on Wednesday after issuing fiscal first-quarter guidance well above Wall Street forecasts, while Lumentum rose 14% on strong fiscal fourth-quarter results and outlook. Workday jumped nearly 18% on Thursday after Reuters reported private equity firm Silver Lake is in talks to buy the software company, with Needham analysts estimating a potential takeover price of $240 to $250 per share. NVIDIA confirmed it is working with a consortium of lenders including Apollo Global Management, Blackstone, BlackRock, Brookfield, Goldman Sachs, and KKR to raise $500 billion for AI infrastructure, signing a memorandum of understanding to establish first-of-their-kind compute financing platforms at global scale. AMD filed a mixed shelf debt offering that could raise up to $5 billion in four tranches, and Argus upgraded Sandisk to Buy from Hold with a $1,600 price target.

Nine of the ten notable S&P 500 companies reporting earnings this week topped consensus EPS estimates, with nine also posting year-over-year earnings growth. Revenue momentum held firm as eight companies beat Wall Street expectations and all ten achieved year-over-year top-line expansion. Among the standouts, Super Micro Computer surged 19.02% after guiding first-quarter revenue to $14.5 billion to $15.5 billion, while Lumentum Holdings jumped 13.6% on a 109% revenue increase to $1.01 billion. Tapestry slipped 16.49% despite a fiscal fourth-quarter beat and in-line fiscal 2027 outlook, and Cisco Systems dropped 8.40% even as product orders rose 35% year over year.

Coherent and Lumentum both reported strong quarterly results as AI data centers shift from copper to optical connectivity. Coherent posted revenue of $2.045 billion, up 33.7% year over year, with its Datacenter & Communications segment contributing $1.615 billion, or 79% of sales, and non-GAAP EPS of $1.74, a 7.60% beat. Lumentum revenue hit $1.006 billion, up 109.3% year over year, with non-GAAP gross margin reaching 50.4%, a 1,260 basis point jump, and operating margin expanding 2,160 basis points to 36.6%. Coherent guided Q1 FY27 revenue to $2.20 billion to $2.40 billion, while Lumentum guided to $1.225 billion to $1.275 billion with operating margin of 39.5% to 40.5%. Coherent is doubling internal indium phosphide output by year-end and again by 2027, with up to $50 million in CHIPS Act funding, while Lumentum has an OCS backlog above $400 million.

Overseas optical communications leader Lumentum posted results that beat expectations, with fourth-quarter net revenue of 1.01 billion US dollars, and gave strong guidance for the first quarter, projecting net revenue of 1.23 billion to 1.28 billion US dollars, far above the market estimate of 1.15 billion US dollars. The company said demand for 1.6T transceiver modules will accelerate from the first fiscal quarter and continue through 2027, driven by AI cluster deployments at leading hyperscale cloud customers. Domestically, the explosion in AI computing power continues to drive demand for optical modules, with 800G optical modules becoming fully mainstream and high-end 1.6T optical modules entering a phase of volume delivery. The first fully domestically produced 100,000-card AI supercluster was recently put into operation, marking a new stage of 100,000-card-level computing infrastructure and further solidifying downstream demand in the communications industry chain. As of 10:22 on August 13, the CSI Communication Services Index was up 2.96 percent, and the Communication ETF Southern that tracks the index was trading actively.

Overseas optical communications leader Lumentum posted results that beat expectations, with fourth-quarter net revenue of 1.01 billion dollars, and gave strong guidance for the first quarter, projecting net revenue of 1.23 billion to 1.28 billion dollars, well above the market estimate of 1.15 billion dollars. The company said demand for 1.6T transceiver modules will accelerate from the first fiscal quarter and continue through 2027, driven by AI cluster deployments at leading hyperscale cloud customers. Domestically, the explosion in AI computing power continues to drive demand for optical modules, with 800G optical modules now widely adopted and high-end 1.6T optical modules entering a phase of volume delivery. The first fully domestically produced 100,000-card AI supercluster was recently put into operation, marking a new stage in computing infrastructure at the 100,000-card level and further solidifying downstream demand across the communications industry chain. As of 10:22 on August 13, the CSI Communication Services Index was up 2.96 percent, and the Communication ETF Southern that tracks the index was trading actively.

Kechuang 100 ETF Penghua rose more than 2.3% intraday, lifted by better-than-expected earnings from a US optical communications giant and clinical progress in innovative drugs, driving gains in optical communications and biopharmaceutical sectors. Lumentum forecast first-quarter net revenue for fiscal 2027 in a range of 1.23 billion to 1.28 billion US dollars, above the market estimate of 1.15 billion dollars. Coherent Corp guided next-quarter revenue at a midpoint of 2.3 billion dollars, higher than analysts' expectation of 2.14 billion dollars. In pharmaceuticals, several drugmakers disclosed new clinical advances in innovative drugs, with self-developed products spanning small molecules, peptides, biologics, siRNA, PROTAC and other technology types achieving phased breakthroughs. As of 10:14 on August 13, 2026, the SSE STAR 100 Index surged 2.56%, while Kechuang 100 ETF Penghua rose 2.36% to 1.86 yuan. Xiangcai Securities noted that innovative drug overseas expansion and value realization have become the core focus, suggesting attention to biotech companies with specific innovative drug technology platforms, integrated pharmaceutical firms, and upstream CXO and research reagent providers in the innovative drug supply chain.

Ping An STAR 50 ETF rose 2.39% to 1.29 yuan, while the SSE STAR 50 Index gained 2.23%. In news, US optical communications giants have been releasing earnings. Lumentum forecast first-quarter net revenue for fiscal 2027 in a range of 1.23 billion to 1.28 billion US dollars, above market estimates of 1.15 billion. Coherent Corp guided next-quarter revenue to a midpoint of 2.3 billion dollars, higher than analysts' expectations of 2.14 billion. China Galaxy Securities believes that recent capacity expansions and private placements among related manufacturers signal that the optical chip capacity bottleneck is being systematically resolved. With mass shipments of 800G and 1.6T optical modules and the evolution of silicon photonics and CPO and NPO technology paths, the profitability of the optical communications sector is expected to improve at the margin.

AI infrastructure stocks surged on Wednesday after blowout results from AI server hardware maker Supermicro and neocloud providers CoreWeave and Nebius Group. Nebius stock surged after quarterly revenue topped analyst expectations, while Supermicro reported fourth quarter results that beat analyst estimates on earnings and issued an upbeat forecast that sent shares higher by more than 6%. AI hosting peers Applied Digital and IREN also moved higher after CoreWeave posted quarterly results highlighting accelerating demand and a surging backlog. Lumentum shares gained after the maker of optical and photonic products for data centers posted fiscal fourth quarter revenue that more than doubled to $1.01 billion, and peers Coherent and Ciena both jumped. The memory and storage complex also rose, with the Roundhill Memory ETF up 4%, SanDisk up 4%, and Micron and SK Hynix each up 4%.

Several technology and consumer companies made significant premarket moves following earnings reports and guidance updates. Super Micro Computer rallied more than 7.5% after issuing first-quarter guidance for adjusted earnings of $1.01 to $1.10 per share on revenue of $14.5 billion to $15.5 billion, both well above consensus estimates. CoreWeave gained more than 18.5% as second-quarter revenue rose 112% to $2.58 billion and adjusted operating income margin reached 5%, exceeding forecasts. Nebius Group jumped more than 12.5% on better-than-expected EBITDA and revenue, while Lumentum Holdings rose more than 8% after beating fourth-quarter estimates. H&R Block surged 11% on an upbeat fiscal 2027 outlook, and Cava Group added almost 12% after topping earnings and revenue expectations. In contrast, Kontoor Brands fell nearly 3% on a slight revenue miss, and software stocks including Workday, Salesforce, Palantir Technologies, and ServiceNow each declined more than 1%.

Lumentum Holdings Inc reported fiscal fourth-quarter results above Wall Street expectations and issued first-quarter guidance that exceeded analyst forecasts, driven by strong artificial intelligence-related demand for optical connectivity in data centers. Adjusted earnings per share came in at $3.23, beating the consensus estimate of $2.95, while revenue reached $1.01 billion, ahead of the $984.57 million forecast and up 109% from $480.7 million a year earlier. For the first quarter of fiscal 2027, the company guided for revenue between $1.225 billion and $1.275 billion, with a midpoint of $1.25 billion above the $1.16 billion consensus, and adjusted earnings per share of $4.05 to $4.35, whose midpoint of $4.20 exceeded the $3.63 estimate. Adjusted gross margin expanded to 50.4% from 37.8% a year ago, and adjusted operating margin rose to 36.6% from 15.0%. Raymond James analysts maintained an Outperform rating and raised their price target to $1,036 from $1,014. Shares rose around 8% in premarket trading, extending a year-to-date gain of more than 122%.

Coherent shares climbed 5.7% in premarket trading to $347.37 after rival Lumentum Holdings reported fiscal fourth-quarter revenue and adjusted earnings above Wall Street forecasts and issued stronger-than-expected first-quarter sales guidance, reinforcing expectations of robust demand for optical networking equipment. The positive read-through encouraged investors ahead of Coherent's own fiscal 2026 fourth-quarter results due after the NYSE close, with analysts forecasting revenue of approximately $1.98 billion and non-GAAP earnings per share of $1.43, representing roughly 93% year-on-year growth. Raymond James lifted its price target on Coherent to $435 from $371 while maintaining a Strong Buy rating, and a Federal Communications Commission proposal to prohibit imports of Chinese optical transceivers could provide a significant advantage to domestic manufacturers, with Coherent positioned as a potential major beneficiary. The company's broad photonics portfolio and global manufacturing operations provide exposure to expanding demand for AI infrastructure, supported by initiatives including Nvidia's $2 billion investment aimed at expanding Coherent's U.S. manufacturing capacity. Attention now turns to Coherent's fiscal fourth-quarter report and its strategic relationship with Nvidia, with the results likely to determine whether the latest share-price recovery can maintain its momentum.

Communication equipment stocks strengthened intraday after optical communications leader Lumentum issued a first-quarter outlook that exceeded expectations. Lumentum's announcement showed fourth-quarter adjusted earnings per share of three dollars and twenty-three cents, above the estimated two dollars and ninety-seven cents. Fourth-quarter net revenue was one point zero one billion dollars, more than doubling year-on-year and also beating the expected nine hundred ninety million dollars. The company expects first-quarter net revenue of one point two three billion to one point two eight billion dollars, compared with the market estimate of one point one five billion dollars. It expects first-quarter adjusted earnings per share of four dollars and five cents to four dollars and thirty-five cents, versus the market estimate of three dollars and fifty-eight cents. Buoyed by the news, the A-share communication equipment sector rose three point zero one percent intraday. Among constituent stocks, Changyingtong rose fourteen point one four percent, Xintian Technology rose ten point two nine percent, Tongding Interconnection rose nine point nine eight percent, Canqin Technology rose eight point seven nine percent, and Tianfu Communication rose seven point two nine percent.

Goldman Sachs Asset Management's Sung Cho says the AI trade is rotating from graphics processors to optical and fiber equipment makers, naming Lumentum and Coherent as key beneficiaries. Cho argues that as AI workloads shift from training to inference, the bottleneck is no longer compute speeds but chip-to-chip and server-to-server communication, driving demand for optical connectivity that is extremely hard to scale. Lumentum reported fiscal Q3 2026 revenue of $808.4 million, up 90.1% year over year, with non-GAAP EPS of $2.37 and operating margin expanding 700 basis points sequentially to 32.2%, while Coherent posted Q3 FY2026 revenue of $1.81 billion, up 20.5% year over year, with its Datacenter & Communications segment contributing $1.36 billion, up 40.6% and now 75% of total revenue. Lumentum shares closed at $813.51, up 599.67% over one year, and Coherent finished at $325.15, up 76.17% year to date.

Applied Optoelectronics and Coherent each surged 13% on Friday after Applied Optoelectronics reported second-quarter revenue nearly doubled to $191.9 million and swung to a non-GAAP net income of $5.5 million from a loss of $8.8 million a year earlier. Lumentum added 8% as the rally extended across optical communications stocks, with the iShares Semiconductor ETF up 2% and the NASDAQ 100 up 0.94%. A weaker-than-expected July jobs report reduced expectations for a Federal Reserve rate hike in September, providing an additional tailwind for growth-oriented technology shares. Applied Optoelectronics' results reinforced optimism around demand for high-speed optical transceivers driven by AI data-center investment, while Coherent and Lumentum moved higher without company-specific catalysts.

The Federal Communications Commission is drafting a rule to ban imports of new Chinese optical transceivers, a move that could reshape the AI supply chain given China controls more than 50% of the global market. Applied Optoelectronics, a Texas-based manufacturer, reported fiscal first-quarter revenue of $151.14 million, up 51.4% year over year, and has expanded capacity to nearly 100,000 units of 800G transceivers per month. Coherent, which received a $2 billion investment from Nvidia, posted fiscal third-quarter revenue of $1.81 billion, with its datacenter and communications segment up 40.6%. Lumentum saw revenue surge 90.1% to $808.4 million in its fiscal third quarter, while contract manufacturer Fabrinet reported record revenue of $1.21 billion. Credo Technology, which offers copper-based alternatives, more than tripled its full-year revenue to $1.34 billion. All five companies have posted four consecutive earnings beats and guided for sequential growth, with the FCC aiming to publish the rule this year.

Counterpoint Research warned that Chinese optical module makers control roughly two-thirds of global transceiver supply and no Western alternative can absorb that volume within one to two years, casting doubt on a proposed U.S. import ban. The FCC is drafting a ban on new Chinese optical transceiver models, with officials hoping to publish the measure before year-end, Reuters reported. Analyst Neil Shah cautioned that Coherent and Lumentum lack the cleanroom capacity, automated packaging infrastructure, and yield scale required to absorb Innolight and Eoptolink's volume within a 12-to-24-month horizon, which could cause cost escalation and delayed AI cluster deployments for hyperscalers like AWS, Microsoft, Meta, and Google. Chinese module makers as a group supply approximately 60% of global optical datacom transceiver revenue, with Zhongji Innolight alone holding roughly 27% of the market and generating 62% of its revenue from the United States in the first quarter of 2026. The proposed ban follows Innolight's $6.8 billion Hong Kong listing and its addition to the Pentagon's list of alleged Chinese military-backed firms, while U.S.-listed optical networking stocks surged on Tuesday with Coherent rising 11%, Applied Optoelectronics gaining 18%, and Lumentum climbing 7%.

Asia Plus Securities assesses that the drop in Brent crude oil below $80 per barrel, driven by hopes of reopening the Strait of Hormuz, is a positive factor for global stock markets. However, the SET Index has limited upside because commodity-related stocks account for as much as one-quarter of total market capitalization. The firm recommends rotating into laggard domestic play stocks. Financial markets have reduced the probability of the US Federal Reserve raising its policy rate to 4.0% to just 53%, down from 67% the previous day, while US Treasury yields have declined, supporting a rebound in US and Asian stock indices. In the technology sector, two key issues are currently the main drivers. First, the ban on photonics components from China is positive for US manufacturers, with short-term speculative opportunities recommended in DR: COHR23 and DR: LITE80. Second, the launch of HBF memory chip technology by SanDisk and SK Hynix is expected to accelerate SanDisk's growth, with the market forecasting revenue growth of 354% year-on-year and earnings per share surging as much as 11,751% year-on-year. Historically, after earnings announcements, the stock price has risen by an average of 6% on the next trading day. For Thailand's July 2026 inflation, the market expects a reading of 2.55% year-on-year, making it highly likely that the Bank of Thailand will keep its policy rate at 1.0% through the end of this year. Foreign capital flows have begun to slow and are signaling a rotation into stocks tied mainly to domestic economic activity. Another risk to watch is the direction of the yen, as speculators betting on a weaker yen are facing pressure from the Bank of Japan.

Shares of Applied Optoelectronics surged 17% to $129.34 on Tuesday after Reuters reported that the Trump administration and the FCC are drafting a ban on U.S. imports of new Chinese optical transceivers used in AI data centers. Coherent climbed 11% to $319.80 and Lumentum gained 6% to $829.42, extending a multi-day rally for the optical group. The reported draft rule, which officials aim to finalize this year, would benefit domestic and non-Chinese suppliers while pressuring Chinese makers such as Zhongji Innolight, which holds a 27% global transceiver share. Applied Optoelectronics, which has guided second-quarter 2026 revenue to $180 million to $198 million and is targeting over $1 billion in full-year 2026 sales, is up 216% year to date. The iShares Semiconductor ETF added 5%, trailing the pure-play optics names because optical transceiver makers are a small slice of the broad semiconductor fund.

Coherent shares surged 13.56% following a report that the Trump administration is drafting a ban on US imports of new Chinese optical transceivers. The Federal Communications Commission is writing the measure and aims to publish it this year, according to four people familiar with the matter. Coherent and Lumentum are the domestic alternatives that stand to benefit, though the Foundation for American Innovation says neither has the scale to replace Chinese vendors. The ban would likely hit Zhongji Innolight, which holds 27% of the global data center transceiver market and generates 90% of its revenue outside China, and was added to the Pentagon's list of alleged Chinese military-backed companies in June. A ban could raise costs for cloud operators such as Amazon Web Services if they are forced to switch suppliers.

Photonics is emerging as a potential solution to one of AI's biggest challenges: moving data quickly and efficiently between chips in data centers. NVIDIA has invested $2 billion each in photonics companies Lumentum Holdings and Coherent, and also took a $2 billion stake in Marvell Technology to collaborate on silicon photonics. Goldman Sachs estimates the total addressable market for AI optical networking will reach $154 billion by 2028. The actively managed KraneShares Photonic and Optical ETF LUMA provides exposure to companies developing optical interconnects, transceivers, and fiber-optic cables, while the KraneShares Artificial Intelligence and Technology Public and Private ETF AGIX holds a stake in Ayar Labs, a private company backed by NVIDIA, Advanced Micro Devices, and Intel. Other photonics ETFs include the Corgi Lithography & Semiconductor Photonics ETF EUV, Tuttle Capital Pure Play Photonics ETF FOTO, and Tema Photonics & Optical ETF LAZR.

The Board of Investment has disclosed that the AI, cloud, and data center trend has propelled investment in Thailand's photonics industry over the past five years to 82.7 billion baht, covering 79 projects. This comprises 12 optical fiber manufacturing projects worth 13.7 billion baht, 47 component and equipment manufacturing projects worth 19.5 billion baht, and 20 complete optical communication product manufacturing projects worth 49.4 billion baht. This reflects a comprehensive industry chain supporting AI data centers and cloud systems. Key companies include Lumentum International Thailand, a subsidiary of Lumentum Holdings which is a partner of Nvidia, Celestica Thailand, and Fabrinet, major optical component manufacturers for Nvidia, Cisco, and Amazon Web Services, as well as Terahop Thailand and Eoptolink Technology Thailand, the world's top two optical transceiver makers. Currently, over 20,000 Thai personnel are employed, and 60 percent of projects are located outside the Eastern Economic Corridor, helping to spread prosperity and create high-skilled jobs across the regions.

Lumentum CEO Michael Hurlston warned at the RAISE Summit that the next AI infrastructure bottleneck will be a shortage of indium phosphide, a niche semiconductor material used in data center lasers, calling it more acute than the memory industry's challenges. Hurlston said the supply-demand imbalance now exceeds 30%, with pump laser constraints effectively sold out for the foreseeable future. Lumentum posted third-quarter fiscal 2026 revenue of $808.4 million, up 90.1% year over year, and guided for fourth-quarter revenue between $960 million and $1.01 billion. NVIDIA has invested in both Lumentum and its competitor Coherent, which is doubling its internal indium phosphide output by year-end 2026. Despite the tight supply, shares of Lumentum, Coherent, AXT, and Applied Optoelectronics have each sold off more than 20% in the past month.